Thoughts on business, entrepreneurship, and life from a Silicon Valley entrepreneur and writer.

Saturday, July 06, 2013

It's easier to push the big picture to the frontlines than to feed details to headquarters

Most entrepreneurs are control freaks. That's not a bad things. When you're a 1- or 2-person company, and when you want to create a great product, you need the person in charge to really sweat the small stuff.

The problem arises as the organization increases in size. Soon, other people are talking with customers, writing the code, and pitching for new business. The "fingerspitzengefühl" you once had as a founder gives way to an uneasy sense that you don't have all the information you need.

The natural reaction is to try to find better ways to collect the information you need. Better reporting. More customer visits. These are all well and good, but they can't solve the fundamental problem:

The more a startup grows, the more information that bombards its boundaries on a daily basis. Pretty soon, that information exceeds the ability of any human being to process and manage.

"Although Dish had more than 100 people employed in its marketing
department and reams of customer data to analyze, when it came time to
figure out how much it was going to charge for satellite service, Ergen [Dish CEO Charlie Ergen]
went into his office and came up with the final number alone. “It would
be like the CEO of Kraft (KRFT)
getting up in the morning and determining how much they were going to
charge at retail for 12 slices of American cheese,” says Neuman. “It
wasn’t that he didn’t invite input or share his thought process, because
he did both. It’s just that he’d had his hands on the wheel for so long
that he trusted his own judgment the best.”

What made it worse, Neuman says, is that Ergen was almost always right."

Through superhuman effort, Ergen manages to micromanage his enterprise, but at the cost of being labeled "the meanest company in America."

The fact is, it's easier to push the big picture to the frontlines so the people there can make the right decision, than it is to feed every last detail back to headquarters.

As the leader of your startup, your job isn't to make every decision; it's to make sure that you convey the strategy and values of your startup to every employee so they can make the right decisions.